A small group of local state, business and community leaders met on Monday to decry a current law that allows certain corporations to avoid paying state taxes on their profits.

John Humphries, campaign coordinator for Better Choices for CT, a coalition of more than 40 community, labor and human services groups, called the ability of multi-state corporations — businesses that operate in Connecticut, but whose parent entities are based out-of-state — to avoid paying certain state taxes “legal money-laundering.”

“It’s not fair to those small businesses, giving the big-box stores an unfair competitive advantage,” Humphries said. “And when they don’t kick-in, the tax burden increases on the rest of us.”

Humphries said 23 states already have mandatory combined reporting laws which prevent corporations from transferring profits earned in Connecticut to affiliates in other states. He said the combined reporting law would treat parent corporations and their subsidiaries as a single business for tax purposes.

State Rep. Mae Flexer, D-Killingly, said those lost tax dollars are crucial, especially when the state is proposing to cut a wide array of social, educational and health programs as legislators struggle to close a $1.2 billion state budget deficit.

“By closing this tax loophole, we could cover much of the $70 (million) to $100 million in (proposed) cuts to municipal aid, community colleges and hospitals,” Flexer said. “And it’s a fairness issue.”

Monday’s press conference was held outside Bousquet’s Appliances in downtown Danielson, where owner Jeffrey Bousquet noted the special relationship his store and other small businesses have with the community.

“You see a lot of small businesses donating to local Little Leagues and other organizations,” he said. “We’re just looking for a level playing field.”

Even more than the multistate tax issue, Bousquet said the lack of taxation on online sales is hurting his store.

“Someone can come in and say they want a washer for $500, like it’s priced online without tax,” he said. “For me to do that, I’d have to drop my price to $460 to cover the tax I have to pay the state. That’s taking money out of my own pocket.”

Don Dauphinais, owner of Danielson Adventure Sports, said the lack of a coherent multistate and on=line tax system means his competitors have more money to spend on product.

“It gives those stores more buying power,” Dauphinais said. “If we’re not on that same level, we have to survive on our service ability. We need those retail sales.”